LOTTE Fine Chemical Co., Ltd.'s (KRX:004000) biggest owners are public companies who got richer after stock soared 7.9% last week

Key Insights

• Significant control over LOTTE Fine Chemical by public companies implies that the general public has more power to influence management and governance-related decisions
• The top 2 shareholders own 55% of the company
• Institutions own 26% of LOTTE Fine Chemical

If you want to know who really controls LOTTE Fine Chemical Co., Ltd. (KRX:004000), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 44% to be precise, is public companies. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, public companies benefitted the most after the company's market cap rose by ₩80b last week.

Let's delve deeper into each type of owner of LOTTE Fine Chemical, beginning with the chart below.

Check out our latest analysis for LOTTE Fine Chemical

What Does The Institutional Ownership Tell Us About LOTTE Fine Chemical?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

LOTTE Fine Chemical already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see LOTTE Fine Chemical's historic earnings and revenue below, but keep in mind there's always more to the story.

LOTTE Fine Chemical is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Lotte Chemical Corporation with 44% of shares outstanding. National Pension Service is the second largest shareholder owning 11% of common stock, and Hermes Investment Management Limited holds about 5.1% of the company stock.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of LOTTE Fine Chemical

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our data suggests that insiders own under 1% of LOTTE Fine Chemical Co., Ltd. in their own names. It seems the board members have no more than ₩424m worth of shares in the ₩1.1t company. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over LOTTE Fine Chemical. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Public Company Ownership

Public companies currently own 44% of LOTTE Fine Chemical stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that LOTTE Fine Chemical is showing 2 warning signs in our investment analysis , you should know about...

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.